In this section I wish to focus on the rent control methods that have been adopted by the Government in three cities in India- New Delhi, Mumbai and Bangalore. These cities reflect the situation that prevails throughout the Country. While rent control laws have been revamped to a certain extent in Mumbai and Bangalore, New Delhi is still awaiting the implementation of revised rent control legislation.
New Delhi
The Delhi Rent Control Act (DRCA) came into force in 1958. The old Delhi Rent Control Act, or legislation like the Urban Land Ceiling and Regulation Act (ULCRA) introduced as a Central legislation in 1976, it must be kept in mind, were framed at a time when the intention was to ensure that ‘rich landlords’ did not terrorise ‘poor tenants’ by evicting them for a bit more filthy lucre. It was also intended to ensure that the rich were not able to accumulate huge tracts of land, far beyond what they needed for their personal use, so that even the less well off had a chance to buy land. However, quite predictably, as with most other socialist-style legislation, it had exactly the opposite effect. The Delhi Rent Act was introduced and approved by Parliament in 1995. The President gave his assent to the Act but strangely enough, the Delhi Government has not implemented it. This is indeed a piquant state of affairs, and it shows the clear influence of certain interest groups on the decision making process. It also brings to light the arbitrariness and unaccountability that plague the functioning of the executive in this country. While the Delhi Rent Act [1995] is an improvement on the existing legislation, since it appears to be only an overly cautious attempt at reform, it falls far short of what was required. However, tenant activists feel that Ease of eviction and limited inheritability are two features that would ruin small traders in old commercial areas.
The old legislation had several disadvantages, one of which was the restriction on sale or transfer of commercial properties which was responsible for the growth in “pugree”, the illegal institution of one time lump sum payment to the landlord by the tenant, primarily to offset the low rents. This was one of the major sources of generation of black money in India. The old Act had also led to the decline in the supply of rental housing in the Capital. Taking advantage of the old law, tenants refused to vacate property they had taken on rent, thus moderate-sized Connaught Place shops that cost a crore, were being rented out for as low as a few hundred rupees a month. , Section 6 of the Delhi Rent Control Act allowed a maximum of a 10% rent hike every three years, no matter what the inflation. In India the average inflation every three years has exceeded 20%. Sot the Act also made it virtually impossible to evict a tenant. This sorry state of affairs improved slightly when in 2002 the Delhi High Court struck down three sections of the Delhi Rent Control Act (DRCA), 1958 which virtually had “frozen” the rent of residential and commercial properties since the legislation came into force. For example, under Section 6 of the Act [which was struck down], considering devaluation of rupee since 1939, the Court said a house rented out for Rs 100 that year would merely fetch Rs 229 to a landlord in 1998, while the value of rupee had decreased from Rs 38.26 to Rs 2.97 during the same period. The Court decreed Sections 4, 6 and 9 of the Act as “ultra vires”, a Stated that these provisions were “arbitrary and unfair” to the landlords, the court said they were violative of the Constitution as they “affect landlord’s right to livelihood, right to life and avocation”.
The DRCA and the [now repealed] ULCRA had together succeeded in throttling development in Delhi and have ended up creating an enormous housing shortage- the very situation that was sought to be avoided by providing for regulatory mechanisms. The implementation of the revised rules would indeed be a boon to both house owners and tenants.
Karnataka
The old Karnataka Rent Control Act 1961 expired on 31.12.1999; this necessitated the promulgation of a new Karnataka Rent Control Act 2001. The Act is aimed at streamlining the entire rent determining process. An important feature is the attempt at curbing the practice of dodging income tax by fixing very low rent on the structure and hiking rent on fixtures. The rules specify that amount paid on these items should not exceed 15 per cent of the rent, while maintenance costs should not exceed 10 per cent of the rent. In order to bring in uniformity for fixation of standard rent, revision, enhancement and deemed rent, the rules provide for approval and registration of valuers. This provision that does away with the concept of static and unchanging rents represents one of the most significant features of the Act. In addition to this, the law has now made it compulsory to enter into written lease deeds thus abolishing the system of oral tenancies. Critics feel that the new law has altered the burden of proof in favor of the landlords and depriving the tenants the protection they received under the 1961 Act. They also believe that it would ruin the landlord-tenant relationship and wreak havoc on the legal system.
Maharashtra [including the city of Mumbai]
Thanks to the old Bombay Rent Act, 1947, Mumbai today presents the symbol of urban decay. The development of housing and infrastructure in the city has suffered immensely under the restrictive provisions of rent control legislation. The extreme regulation of rents by the Government has led to a situation where, in some case, some tenants are paying rents fixed as far back as 1940 since under the Bombay Rent Act, there was a “freeze” on the rent paid at the beginning. No further increase in the rents was permitted. The Act, which applied only to private premises, provided that rent in excess of the standard rent is illegal except where an agreement entered into before September 1, 1940 provides for periodic increases. The rent control laws led to the neglect of repairs and maintenance and had virtually frozen the municipal bodies’ income from property taxes, which are based on rateable values, which in turn are a function of the prevailing rents. Most if the buildings in Mumbai are in a state of disrepair and neglect because the landlords are not interested in taking up improvement works since the rent they receive is not enough to offset the costs of repair. People who occupy some of the prime properties in south Mumbai-some of the most valuable real estate in the Country, still continue to pay a princely sum of a few hundred rupees every month as rent. This anomalous situation can be attributed to the unjust provisions of the Rent Act.
The unified Maharashtra Rent Act, 1999 replaced the Bombay Rent Act, the jurisdiction of the former now extends throughout the State. The new act says that the rent may be increased by five per cent in the first year, after which landlords would be permitted to raise the rent by four per cent every year following that. They are also permitted to increase the rent by a reasonable amount, if any structural repairs are carried out on the building. This has provoked criticism from both sides to the issue. The landlord associations are displeased with the “small” five percent increase while several tenants’ rights bodies feel that the rents will escalate exorbitantly and therefore it is not a fairly framed act. Also, Under Section 55, all tenancy agreements, including leave and license agreements, must be in writing and are to be compulsorily registered after the commencement of the Act. There is a fear in Mumbai amongst tenant rights associations that adopting the rates and structure for escalation together with a rate of return of even 5 per cent would result in an overwhelming body of protected tenants being unable to meet the increased burden. Another objection to the new legislation raised by tenant associations is the fact that makes the eviction of tenants easier and the fact that it provides severe curbs on the right of inheritance of tenancies.
Rented Building Owners Association Kerala 
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